Senator Jon Kyl: We Not
are Taxed Too Little - We are Spending Too Much

Michael Bowman

July 1, 2011

One day after President Barack Obama urged the U.S. Congress to
intensify efforts to avert a debt crisis, the Senate appears to be doing
just that. A recess has been canceled, and the president has been
invited to Capitol Hill for direct talks with lawmakers.

President
Barack Obama during a news conference in the East Room of the White
House in Washington, June 29, 2011.

If President Obama hoped to spark a reaction from Congress on the
urgency of U.S. debt negotiations, he appears to have succeeded. At the
president's urging, Senate Majority Leader, Democrat Harry Reid canceled
next week's scheduled Independence Day holiday recess.

Meanwhile, the chamber's top Republican, Minority Leader Mitch
McConnell, urged a more immediate step. "I would like to invite the
president to come to the Capitol today to meet with Senate Republicans,"
McConnell said.

McConnell said Obama
should hear a direct Republican response to Wednesday's presidential
news conference, where Obama urged greater flexibility from Republicans
on ways to trim the federal budget deficit.

The White House declined the on-the-spot invitation. Press Secretary Jay
Carney says the president is well-aware of the Republican stance on the
budget, but he reaffirmed the president's commitment to continue
negotiations.

The back-and-forth activity comes ahead of an August deadline to raise
the federal borrowing limit or face a possible default on America's $14
trillion national debt. Republicans have insisted on trimming the
federal budget deficit as a condition for raising the debt ceiling.

Members of both major
political parties agree that federal spending must be cut. But Democrats
say they favor limited cuts in domestic spending, combined with higher
taxes on the wealthy. So far, Republicans have refused to consider
raising taxes on any segment of society.

"Our problem is not that we are taxed too little. Our problem is we are
spending way too much," said Republican Senator Jon Kyl of Arizona.

Republicans say tax hikes proposed by Democrats would punish small
businesses that create jobs as well as America's struggling middle
class.

Democrats largely have abandoned hope of raising federal income tax
rates on anyone, wealthy or otherwise. Instead, they now advocate ending
special tax breaks that benefit the well-to-do and certain corporate
interests, such as the petroleum industry.

Democrats took to the Senate floor to criticize preferential tax
treatment enjoyed by the richest Americans, such as accelerated tax
deductions available to racehorse owners.

"Horse racing may have been called 'the sport of kings,' but that does
not mean that the owners of horses, those millionaires and billionaires,
need royal tax treatment," said Democratic Senator Jeff Merkley of
Oregon.

New York Democratic Senator Charles Schumer took aim at interest
deductions for purchasing luxury yachts. "The deduction Congress helped
create for middle class families to realize the American dream of
homeownership is helping millionaires and billionaires get a 35 percent
discount on their yachts," Schumer said.

Republicans counter that even if such tax breaks were eliminated, the
fiscal impact would be minimal - at most, a few billion dollars from a
$1.6 trillion federal deficit. Democrats respond that the issue is one
of fairness and shared sacrifice.

Senator Schumer says that if Democrats accept budget cuts to programs
that benefit the poor and disadvantaged, Republicans must be willing to
end tax breaks for the wealthy. "We will not get anywhere unless both
sides compromise," Schumer added.

Republicans
say Democratic attempts to preserve federal spending levels and raise
tax revenues will hurt an already-struggling U.S. economy and make the
debt crisis even more severe.

"Who really thinks that the answer to a $1.6 trillion deficit is more
deficit spending? Where in the world does that idea come from?" asked
Senator McConnell.

Allowing taxes to rise would violate a pledge many Republican lawmakers
made when running for Congress. Similarly, allowing sweeping cuts to
educational programs and America's social safety net would anger core
constituencies of the Democratic Party. Both sides agree on the need to
put the United States on a sustainable fiscal path. But with only weeks
to go before the federal government reaches its borrowing limit, a
bipartisan debt-reduction deal shows no sign of materializing.